A Stupid Son

There once lived a man who was a multi-millionaire but had an extremely stupid son. The father himself was very entrepreneurial and believed in working hard, being creative, taking risks and not squandering money. Though the father tried hard to instill the same values in his son from early childhood, his son somehow chose a different path, being influenced more by his spoiled friends than his father’s teachings. Gradually, as the son went through high school and college, the distance between him and his father grew further. After the son graduated from college, he got a job which paid reasonably well. His salary would have been more than enough to manage a family of three even at an upper-middle class standard. But the son would spend his salary in its entirety in the first week, and then go to ask his father for pocket money for the rest of the month. The son was also a free loader in his father’s house. The father was worried, but the mother did not care much. She boasted about her son’s lavish ways when she was with other housewives. She loved talking about her son’s “prince-like” lifestyle which made her feel like royalty. The dad felt sick every time he heard the mother and son talk. One day, the son came to the father and said that he wanted to start a new venture. The father said, “It is good that you are finally thinking of doing something on your own.” The son smiled and said, “I need money to start the new venture.” Being the kind of man he was, the father was very straightforward in his reply and told his son that those who cannot manage their own pennies should never ask for a dollar from others, let alone convince others that they could take their venture to a successful end. The father said, “You can’t even manage your own salary, how can I expect you to manage a business?” He added, “Look at your room. How messy is it? Look at your car’s trunk, how dirty you keep it. You never pay your bills, it is always past due, and your mom needs to remind you. How can you think of starting a multi-million dollar venture when you can’t manage your own private affairs? I do not believe you are capable of doing something of that scale. Do not invite more trouble for yourself, my son. I am ashamed of having you as a son. Somehow your upbringing was faulty despite my best efforts.”

The son still did not get the message. He replied, “Father, if you don’t give me the money, I can borrow it from someone else. But I am disappointed that you care more about your money than your son.” The father said, “Good luck – go do the fishing – you can’t win if you do not learn how to manage your own pennies. I have seen enough.”

I wanted to use the above anecdote to illustrate the case of the current Nepali government. The government has a total revenue of Rs. 70 billion and Rs. 30b more in promised grants and donations. With Rs. 100 billion in the national treasury, the government simply fails to do a good job managing that. This is not that large a budget to manage. In terms of dollars, this is just US $ 1.35 billion. A good-sized university in the US has a budget of this amount. Even mayors of small towns manage budgets of this size beautifully. We do not need to look that far – Indian IT companies Wipro and Infosys both had revenues of more than US $ 2 billion in the fiscal year ending March 2006. Nepal’s budget is les than that. On top of it, there are hundreds of economists working for the government for the National Planning Commission and Ministry of Finance, advising the politicians on how to manage the budget. There are also a large number of advisors who discuss about the planning and budgeting. Yet the government fails to manage the revenue in a better way. They need foreign advisors to manage this tiny budget. Our government can be compared to the stupid son in the above example. And us citizens are like the wary father. How shameful of these politicians who do not know how to manage their own pennies but run around asking for dollars to spend!

This week, the media in Nepal have been engrossed in providing details about how PM Koirala secured monetary support from India. The total multi-year package is less than 10% of Nepal’s annual revenue and still Mr. Koirala and his advisors like to think of it as a big win. To put it simply, this is begging. What’s more, India has not given this without thinking of extracting some huge benefit in return from Nepal. This simply enhances their negotiating power on bilateral security and natural resource issues. Soon the Indian side is bound to say, “Remember we gave you tons of money when your PM begged for it, and in return now you guys need to listen to us when we need you.” Our politicians who think begging is the best alternative of all will simply give in and agree to treaties that may weaken Nepal for a long time to come. This is unfortunate and the government needs to learn from the simple Indian saying:

मुफ्त मे तो भाई थ्प्पड भि नहि मिल्ति .

What then should the government have done? I believe that they should first learn to mange their own pennies. Very simple – they should do what they can afford. The government should cut expenses and divert revenue to income generating development projects. Massive operation costs should be cut and money should be diverted to development activities. This can be related to a small start-up company. A company in the start-up period spends a lot of money in development and very little in operations. As the company grows and the product is developed, the operation costs go up. Nepal is still in the start-up period. The government should therefore cut operation related costs and should learn to live with what they have. Once they learn to do so, only then should they go and borrow money which they ought to invest in infra-structure development and law enforcement. The government should learn to be profit oriented. They should always borrow in the best possible terms. We can’t build a nation on grants and donations. Borrowing and paying on time teaches us to be financially disciplined; grants and donations spoil us.

To conclude, I would say that learning to live on our own pennies is the most important first step towards growth and prosperity. This applies to a person as well as to a nation. Those who think that they can beg and survive will never prosper. Prosperity follows those who have self-esteem and self-respect and who know how to turn their own pennies to a dollar. As is often said, before going shopping, you should watch your own pocket first.

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Blog Comments

I was not denying that the budget may be mismanaged. I was merely asking what evidence do we have that supports the claims that it is mismanaged.

You have given the examples of state-run-corporations. That is fine. I agree with you that there are several Government enterprises that have failed. They are excellent examples of government inefficiency.

But does this create sufficient ground for advocating a profit-oriented government? Does it mean that we should never have a non-profit making government company?

Lets take another example, The National Trading Corporation, a government company that sells iodized salt (apparently, it prvents Gal Gand), among other things. This company sells Salt at below market prices. As a result, almost everyone is able to afford Iodized salt.

A profit oriented government (as you suggest the government should be in your essay) should not allow this. A private company, as we all know, will not intentionally take losses out of respect for the public good.

This example contradicts the claim that the government should always be profit-oriented (as it is stated in the essay above). There are areas in ANY contry’s budget where financial losses are taken knowingly. My boader point is only that although Profit Maximizing behavior is good for a Company it is not and should not be the government’s goal.

To me there are evidences all around. Every institution that Nepal gorvernment either partially own or fully own is almost banrupt. All those institutions are under Nepalese Budget umbrella – I do not whether you agree to this notion or not. If you do, please take the example of Nepal Airlines (formerly RNAC). This is example of budget mismannagement as Nepal government has been subsidizing Nepal Airlines for the last several years. How coudl it be? Why can simply revamp this institution? Take Nepal OIL corporation – same story. Take Nepal Bank Limited and Rastriya Banijya Bank – same story. All of thise institutions are supposed to be making money – not losing. They woudl have been bankrupt if they did not have govt subsidy. Is not this mismanagemnt of Nepal Budget? Why use our tax money to save useless isntitutions? Govt is working without using common sense. They should focus and deliver. If they throw money around without solid agenda and just try to fulfill political will, I call that mismanagement whether you agree or not.

I am not an economist even if I have economics educagtion because I do not practice it for livimg. You seem to be have better knowledge on economic affair. I am just writing out of common sense.

Once I met a drunk man walking towards his home. I recognized him. I said “hello.” He said “who are you?” I said “I am Rudra, your neighbor.” He said “Rudra Who – I do no know you.” I said “you are drunk – Man!” I could see him walking unbalanced and he smelled bad too. The man replied “what proof do you have that I am drunk.” I kept quiet and laughed. To ask question whether Nepal’s budget mismanaged or not to be someone like the drunk man. Please watch yourself. There are overwhelming evidences around you and you are asking for more evidfences? Please wake up. Where are you?

Who says Nepal has been poor for long? Nepal has been MisManaged.Take example of Big Boss Rajendra Khetan’s Interview: Nepal has gold thrown in every corner of streets but we Need Marwaris or other Businessmen to pick that up, Nepali eyes only see rouge,messy stinking garbage. We lack good entrepreneurs, Managers in Nepal who own and utilize the budget. Even a Company may undergo such eventualities(becoming poor each day, losing all exisiting assets) in case of MismanageMent.He does not have 10000 Rs. Cash in his pocket for lavishing , ALL for business only.

You said it just right Rudra, Enough with OPM (Other people’s money). Prominent Nepali people… likewise prominent people all over the world, are not rich because they use OPM.

True Richness does not come from having hard cash in the bank account and material property. To me, Richness comes from having friends around when you need them; Friends with positive attitude, always happy, helpful, above all understanding no matter what the situation. I could go on drifting along this thread but I have a mission to accomplish. Thanks for writing this essay. Made me realize how stupid i can be.

It is kind of like how Eric Clapton put it in one of his record album.

You have raised some good points Rudra Dai. If our politicians were smart enough in handling and managing their assigned tasks, Nepal would be in much better state today. Most of our bureaucrats and politicians are good for nothing. They have crab mentality. They wasted country’s golden 15 years quarrelling for positions, embezzling country’s coffers, betraying people’s trust, and sabotaging country’s economic development. These thugs have not learned anything yet. Of course, India will definitely seek something in return from Nepal while delivering promised financial assistance. India’s intention is justifiable as we should not forget that country is run on self-interest, not on sentiment.